BANGOR – Some of the racino-related events in recent weeks apparently have irked the company poised to develop the state’s first racetrack casino, which in turn has created friction within Bangor’s City Council.

City Councilor David Nealley, recently named executive vice president of Capital Seven LLC, suggested Monday that recent actions on the part of at least three of his fellow councilors might have reached the point where they need to be addressed through legal action.

Critics of the city’s deal with Capital Seven, the company owned by Hawaiian entrepreneur Shawn Scott, say it was struck in haste, especially considering the late interest of an Iowa-based developer that proposed $40 million in improvements to the harness racing track at Bass Park and guaranteed the city a minimum of $1.5 million a year, both figures substantially higher than Capital Seven’s proposal.

Earlier this month, Councilors Anne Allen and Gerry Palmer, two of three councilors who opposed the Oct. 30 agreement with Capital Seven, lent their names to a petition seeking to undo the city’s 5-3 vote to partner with the firm. Mayor Dan Tremble also opposes the agreement, but did not sign the petition.

The petition is a required first step in launching a citywide referendum. Petitioners recently began collecting the needed signatures – in this case 2,274, or 20 percent of the votes cast in the last gubernatorial election – to send the matter to voters. As worded, however, the referendum would not be binding, City Solicitor Norman Heitmann said earlier.

During a special meeting Monday night, city councilors listened to presentations from three of Capital Seven’s potential competitors. Companies that said they wanted to step in should Capital Seven be unable to meet the terms of its agreement with the city were Kehl Management Co. of Iowa, Penn National Gaming, headquartered in Wyomissing, Pa., and Delaware North Companies, based in Buffalo, N.Y.

Nealley said these actions fly in the face of the city’s development pact with the company, which stipulates the “City shall assist” the company in securing a license from the Maine Harness Racing Commission.

“If Mayor Tremble, Councilor Palmer and Councilor Allen continue their attempt to undermine and discredit Bangor Historic Raceway and Capital Seven’s efforts to become licensed, then Capital Seven will be forced to file suit against them,” Nealley said Monday.

The council, Nealley noted, has entered a development agreement with Capital Seven. “Whether they like it or not, they are obliged to fulfill it and honor it.”

The three councilors Nealley named say they’ve done nothing wrong.

“I’ve done nothing to discredit Capital Seven,” Tremble said Monday. “The only ones who’ve done anything to discredit Capital Seven are Capital Seven and David Nealley.”

On Tuesday, Palmer made clear where his loyalties lay.

“My first responsibility is to the citizens of Bangor and their interests come first with me,” he said, adding, “Part of Capital Seven’s business strategy appears to be to sue … willfully across the countryside.”

Palmer also said, however, that he “strongly” supports the racino concept, largely because of the financial boost it could give to the city’s efforts to replace the aging Bangor Auditorium and Civic Center. His problem was with the developer.

“What I read in the press is very disconcerting about this organization, if true,” Palmer said, referring to reports that one of Scott’s associates is a convicted felon and that a lawsuit has been filed against one of Scott’s holdings in New York. “I would also say that if we do open this up to other developers, Capital Seven would certainly be welcome to apply.”

Allen expressed similar sentiments Tuesday.

“I just feel that as members of the council we need to do what is in the best interest of the citizens of Bangor,” she said. “I felt – and I still do – that the decision to go with Capital Seven was done in haste and it would have been better to [seek proposals from other developers] and perhaps to have waited for a decision from the [harness racing] commission.

“I guess I’m disappointed with Councilor Nealley for his attack [on his council colleagues],” she said. “I hope we can rise above this and pull together as a council.”

Last year, representatives of Capital Seven, one of several companies Scott owns, approached Bangor with plans to develop a $30 million racino at city-owned Bass Park, home of Bangor Raceway and the Bangor Auditorium and Civic Center.

The plan appears close to fruition, with only state licensing to be cleared. However, a state-mandated background check of Scott and his businesses remains to be reviewed by the Maine Harness Racing Commission. Scott won approval in a citywide vote in June and later struck a development deal with the city. Maine voters on Nov. 4 authorized slots for Bangor Raceway and Scarborough Downs.

Capital Seven’s plans call for developing the racino in two phases, with the bulk of the investment occurring in the second phase. The construction of a hotel, however, won’t occur until after Capital Seven’s gross revenues, or income after payoff to players, hit the $60 million mark.

Also Monday, Nealley expressed concern that some in the city – among them people close to the governor’s office – are actively working to prevent Capital Seven from accomplishing its goals in Bangor.

Among the documents the Bangor Daily News has obtained is a copy of an Oct. 9 letter from a Louisiana racetrack official to Kehl Management offering the track’s racing management expertise in the event Kehl, which lacks that experience, is tapped to operate the proposed Bangor racino. The letter was faxed to City Manager Edward Barrett on Oct. 10 from the Bangor law office of Joseph Baldacci, brother of gambling foe Gov. John Baldacci.

On Tuesday, Joseph Baldacci said his role in the matchmaking process was limited to helping with introductions and references. He said that Kehl was referred to him by an old law school buddy, Belfast lawyer Joseph Baiungo.

A former Bangor councilor, Baldacci also said he referred Kehl to Edmond Bearor of the Bangor firm Rudman & Winchell because as a “solo practitioner” he was unable to provide the level of staffing and resources he believed Kehl needed – not because his brother the governor opposed any expansion to gambling in Maine but for practical reasons.

Lee Umphrey, the governor’s spokesman, had this to say Tuesday about the racino and related matters: “Maine needs more stringent regulations to oversee a slot machine operation and that more than likely includes a gambling regulatory commission. The governor and his legal team are working on legislation that may be ready as soon as next week.

“The governor also has been having conversations with the legislative leadership about the need to establish strong oversight of slot machines and racinos,” he said. “We’re hopeful that as much information about Capital Seven as possible is released to alleviate any questions that the public has and for the harness racing commission to hold off on making any licensing decisions until all the information is out and Maine has appropriate regulatory systems in place.”

In related matters, a consultant for Capital Seven LLC and Cianbro Corp. on Tuesday outlined the companies’ plans to put the first phase of the two-phase racino project in Bangor on a fast track.

Consultant Charles McCallion, now of Honolulu, Hawaii, said he has come out of retirement to help Scott bring his project in Bangor to fruition.

Although Scott and his company have yet to obtain the harness racing license they need to open a slots parlor at Bangor Raceway, he is prepared to invest up to $400,000 over the next month to renovate the more than 50-year-old grandstand into a slots parlor housing 250 of the machines.

McCallion discussed the grandstand plan during a meeting of the City Council’s business and economic development committee, which gave its initial approval for the proposed changes to the grandstand’s interior and exterior.

McCallion said that exterior plans called for addressing a large frost heave outside the grandstand’s main entrance and adding a breezeway to cut down on cold air, snow and mud that gets inside.

Interior renovations call for the addition of a sprinkler system, carpeting, new electrical and heating systems and enlarged photographs of people and horses important to the city’s historic dirt oval, among other things, he said.